Synaptics, Incorporated: Another Day, Another High

For the first couple of days, I would nod my head and pump my fist in victory. Then, I would smirk and disbelievingly shake my head. Now I just slightly raise my eyebrows in a subdued manner and shrug. It seems that every day in June brought Synaptics’ (SYNA) stock to a new multiyear high.

The rise actually started in early May, after the company released its March 2007 results from operations. Not only did they beat analysts’ expectations in terms of revenue and earnings, but they raised guidance for the future as well. The momentum continued as Synaptics announced new products, attended financial conferences, and rang the opening bell at the NASDAQ. But above all, Synaptics has benefited from the buzz – or, should I say deafening roar? – of the iPhone.

Interestingly enough, Synaptics’ technology is, by all accounts, probably not even in the iPhone! But, the idea of more and more cell phones adopting keyboard-less, touchpad-only interfaces (if only to compete with the iPhone) has sent Synaptics’ stock soaring over 65% in the last year. LG’s Prada cell phone does feature Synaptics’ technology, and will be released in the US very soon, by the way.

But besides phones, this touch technology should continue to grow in other areas as well – think computer screens, GPS systems, in-car dashboards, TV remote controls, and MP3 players. Synaptics, whose revenue source is still currently dominated by its laptop touch-pads, has grown its “digital lifestyle product” sales by more than two-and-a-half times in the March 2007 quarter. And, with such products representing just 17% of its business, Synaptics’ non-PC segment growth has nowhere to go but up.

So, will Synaptics’ stock continue its one-way climb? Only time will tell, but my guess is that it will. The spread of its cool technology from laptops to phones to other, still yet-to-be-invented devices, as well as the draw of such technology in the iPhone, should continue to propel the stock to new highs. In the meantime, perhaps my shrugs will change to yawns; another day, another high indeed.

Disclosure: Author has a long position in SYNA

SYNA 1-yr chart